The relatively recent development of the theory of vector control has enabled ac machines to be transformed, performance wise, into equivalent separately excited dc machines while retaining the many advantages that ac machines have over dc. The ac machines used include the induction and permanent magnet synchronous motors. A precise knowledge of the machine parameters is needed in order to implement indirect vector control on induction motor drive systems where the position of the rotor flux is not measured. If the machine parameters change relative to the preset values in the vector controller, then the decoupling of the torque and flux channels, which is the object of vector control, is lost. Low frequency torque and speed oscillations can result with a consequent degradation in the drive performance. The PMSM drive system is also parameter sensitive although not depending on the same parameters as the induction motor drive. It is well known that machine parameters change with temperature, saturation and on the frequency of operation. An assessment of the overall performance of an ac motor drive must therefore include a study of its parameter sensitivity. In this paper, a detailed steady state study of parameter sensitivity for both the induction and permanent magnet machines is done. Comparisons are also made based on the results of this investigation.